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Standard & Poor's downgrades Gabon's sovereign rating

The Standard & Poor’s rating agency has downgraded Gabon’s long term sovereign credit rating in foreign and local currencies to “B” from a stable outlook of “B+”.

S&P also graded the country “B” on its short term sovereign credit rating in foreign and local currencies.

The agency said the downgrading was due to the fall in oil prices.

“We expect the growth of real GDP to slow down while remaining at 4.5% average from 2016 to 2019, mainly because of low oil prices and continued fall in production of crude, which should decrease to 7% in 2016-2017 as existing oil fields reach maturity,” the agency said.

It said oil contributes 40 percent of the country’s earnings, 80 percent of export and 20 to 30 percent of Gross Domestic Product (GDP).

S&P expects current account deficit to be around 3.8% of GDP in 2016 and remain at the same level in 2017.

The agency said deterioration resulting from oil price slump should be compensated by decrease in volume of imports.

The rating agency explained that the stable outlook which it gave the country, was due to a projected decrease in budget deficit over the next few years.